Planning for any activity is one of the starting points. It may not be visible for easy and routine kind of activities but where an activity depends upon many other activities complexity increases and thus planning becomes all pervasive.
These are the components of a good procurement project plan:
1. Scope. The scope is the goal of the procurement. Sometimes, you can use the description from your RFP, RFI, or RFQ for your scope. But the big secret is that it has to be very specific and document every assumption that has been made.
2. Schedule. The schedule includes a work breakdown structure - the specific steps that are required to complete the procurement. You break down each activity into its smallest task. Then you can assign a specific amount of time it is going to take to do each one of those tasks.
3. Budget :The budget can mean different things to different companies. In some companies, if you're billing your time to specific internal projects or the business unit, the budget does
become important. The easiest way to create a budget is to tie it to the schedule, multiplying the number of hours of work by the pro-rated salaries (perhaps including benefits) of the workers.
4. Quality Plan. The quality plan lays out how you're going to maintain the standards and requirements for a good procurement, adding examples of ensuring that competition is fair and that suppliers are qualified
5. Human Resources Plan. The human resources plan describes the qualifications of the personnel that you need on your team. Usually, you can get the people you want if you can justify exactly why you need them.
What is it that they know or do that you need? Remember to document it if you aren't allowed to use the people that you asked for.
That can help you in explaining why your project is not doing as well as you thought it ought to do.
6. Communications Plan. The communications plan clearly describes who is on the team, who the end users are, and anyone else affected by the procurement.
Definition & Scope of Materials Management As you know , the fundamental objectives of the Materials Management function ,often called the famous 5 Rs of Materials Management, are acquisition of materials and services:
of the right quality
in the right quantity
at the right time
from the right source
at the right time
From the management point of view , the key objectives of MM are :
To buy at the lowest price , consistent with desired quality and service
To maintain a high inventory turnover , by reducing excess storage , carrying costs and inventory losses occurring due to deteriorations , obsolescence and pilferage
To maintain continuity of supply , preventing interruption of the flow of materials and services to users
To maintain the specified material quality level and a consistency of quality which permits efficient and effective operation
To develop reliable alternate sources of supply to promote a competitive atmosphere in performance and pricing
As Purchasing becomes more complex the following aspects too assume more importance to management now than ever before. In fact , management is looking out for results in the following areas from its Purchase functions:
Productivity Improvements - Management will always expect you to do more work with fewer resources. No matter whether you're in a tactical or strategic purchasing organization, there are many productivity metrics that you can choose from to track productivity gains: PO's per buyer per day, average length of sourcing cycle, man-hours per dollar saved, etc.
Cost Savings- Management wants Purchasing to save money. However, successfully achieving and reporting cost savings requires a careful approach. Be
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sure to synchronise your definition of cost savings with management's definition, track your cost savings, and focus on total cost reduction, not just price reduction at any cost (L1 syndrome) A new concept , Total cost of ownership (TCO) is a powerful approach now. Savings need to be seen on a long term basis.
Brand/Differentiation Support - Your organization's mission or vision statement
should give you some clues as to how your organization wants to be perceived in the marketplace and how it wants to be differentiated from its competitors, such as offering higher quality, faster cycle time, better service, lower cost, or something similar.
Make sure that your decisions and metrics support your management's brand and differentiation strategy.
As futile as this sounds, you'd be surprised how many organizations have a mission of being the "highest quality provider" in their industry, yet their purchasing departments measure only cost savings.
Customer Satisfaction - Sometimes, being in purchasing can make you feel separated from your organization's customers. But management relies on things that you're responsible for, like assuring continuity of supply, to keep its promises to its customers etc.
Realize that you can personally be responsible for your organization's failure to meet customer expectations. In the era of tough competition, organizations shall have have to meet customer expectations (read delight) to survive and Purchasing has a critical role in that survival.
Positive Cash Flow- In some organizations, the timing of monetary receipts and payments is critical. Those organizations cannot afford to have more cash leaving the company than coming in during certain periods.
Be aware of that and negotiate appropriate terms with your suppliers. But don't just pay them late and hope that they don't notice. Remember , once bitten twice shy is a great saying ,applicable to many organizations.
Procurement Project Management Plan
Planning for any activity is one of the starting points. It may not be visible for easy and routine kind of activities but where an activity depends upon many other activities complexity increases and thus planning becomes all pervasive.
These are the components of a good procurement project plan:
1. Scope. The scope is the goal of the procurement. Sometimes, you can use the description from your RFP, RFI, or RFQ for your scope. But the big secret is that it has to be very specific and document every assumption that has been made.
2. Schedule. The schedule includes a work breakdown structure - the specific steps that are required to complete the procurement. You break down each activity into its smallest task. Then you can assign a specific amount of time it is going to take to do each one of those tasks.
3. Budget :The budget can mean different things to different companies. In some companies, if you're billing your time to specific internal projects or the business unit, the budget does
become important. The easiest way to create a budget is to tie it to the schedule, multiplying the number of hours of work by the pro-rated salaries (perhaps including benefits) of the workers.
4. Quality Plan. The quality plan lays out how you're going to maintain the standards and requirements for a good procurement, adding examples of ensuring that competition is fair and that suppliers are qualified
5. Human Resources Plan. The human resources plan describes the qualifications of the personnel that you need on your team. Usually, you can get the people you want if you can justify exactly why you need them.
What is it that they know or do that you need? Remember to document it if you aren't allowed to use the people that you asked for.
That can help you in explaining why your project is not doing as well as you thought it ought to do.
6. Communications Plan. The communications plan clearly describes who is on the team, who the end users are, and anyone else affected by the procurement.
Definition & Scope of Materials Management
As you know , the fundamental objectives of the Materials Management function ,often called the famous 5 Rs of Materials Management, are acquisition of materials and services :
From the management point of view , the key objectives of MM are :
Management's expectations From Purchasing
Cost Savings - Management wants Purchasing to save money. However, successfully achieving and reporting cost savings requires a careful approach. Be
||
Brand/Differentiation Support - Your organization's mission or vision statement
Make sure that your decisions and metrics support your management's brand and differentiation strategy.
As futile as this sounds, you'd be surprised how many organizations have a mission of being the "highest quality provider" in their industry, yet their purchasing departments measure only cost savings.
Customer Satisfaction - Sometimes, being in purchasing can make you feel separated from your organization's customers. But management relies on things that you're responsible for, like assuring continuity of supply, to keep its promises to its customers etc.
Realize that you can personally be responsible for your organization's failure to meet customer expectations. In the era of tough competition, organizations shall have have to meet customer expectations (read delight) to survive and Purchasing has a critical role in that survival.
Positive Cash Flow - In some organizations, the timing of monetary receipts and payments is critical. Those organizations cannot afford to have more cash leaving the company than coming in during certain periods.
Be aware of that and negotiate appropriate terms with your suppliers. But don't just pay them late and hope that they don't notice. Remember , once bitten twice shy is a great saying ,applicable to many organizations.
Crisis in Purchasing & emergency Planning
Negotiation Questions from suppliers that can Surprise you
The Supplier Code of Conduct
Entering into a Time and Materials Contract
Supplier's bid Comparison Formula
Supplier Diversity Program
Determinants of a Modern Purchasing Department
Negotiating With Suppliers Over their Policies
Procurement Project Management Plan
The Purchasing Risk Analysis
Inventory Audit Checklist
Hazards Of Purchasing profession ?
Tactical vs Strategic Purchasing
Demystifying Group Purchasing Organizations
Suppliers' Secrets For Negotiating With Purchasing
Cost Savings Reporting: Dot Your I's!
Code of Ethics in Purchase
Six Sigma to Success